Research on Personal Income Tax Affecting Structure of Resident Consumption Expenditure in China

The purpose of this thesis is to evaluate the impact of personal income tax on the structure of resident consumption expenditure. Food expenditure is of great importance in the consumption expenditure of residents, and it is directly related to the living standard and affluence of the residents, the author uses Engel’s coefficient to conduct the corresponding analysis. This thesis is the empirical analysis of the impact of progressive index of China’s personal income tax and average tax rate on food expenditure of the resident consumption expenditure. The results show that average tax rate is negatively correlated with Engel’s coefficient of the seven income group residents and the integral residents. Among them, the average tax rate has the greatest impact on the consumption expenditure structure of the residents with the lowest income group, while the progressive level has no significant impact on Engel’s coefficient of the seven income group residents and the integral residents. From the international horizontal comparison, too low of the average tax rate is the important factors for restricting China’s personal income tax from reducing Engel’s coefficient.